Thank You

Error.

An error has occurred and your email has not been sent.
Please try again.

December 8, 2012

13Ds are filed with the Securities and Exchange Commission within 10 days of an entity's attaining a greater than 5% position in any class of a company's securities. Subsequent changes in holdings or intentions must be reported in amended filings. This material has been extracted from filings released by the SEC from Nov. 29 through Dec. 5, 2012. Source: InsiderScore.com

Activist Filings

VN Capital said in its filing that it believes "a more responsive board would immediately start returning capital to its shareholders…via a reverse split/odd-lot tender offer or a reverse Dutch auction." VN said the advantages of this strategy include giving an immediate premium to shareholders, boosting the stock price, and reducing regulatory requirements by lowering the share count. VN said it has discussed these proposals with both management and the board in the past and will continue to engage with them, and consider seeking board representation.

VN disclosed owning 922,112 shares (9.7% of the voting shares) and did not disclose buying or selling any.

Business: Specialty steel and bearings Investor's Average Cost: $43.16 per share Stock-Market Value: $4.4 billion ($45.46 per share) What's Happening: Relational Investors and CalSTRS submitted a shareholder proposal recommending that the company spin off the steel business from the bearings business.

Key Numbers: $64.98: the combined stock price that Relational estimates the steel and bearings businesses would trade at as separate entities. 6.15%: percentage of common owned by Relational and CalSTRS. 16%: percentage of common controlled by management.

Behind the Scenes: Relational is a seasoned and highly respected activist investor. It believes profits from Timken's bearings business may be used to support the volatile steel business during downturns, dragging down the company's valuation. There are soft synergies between the two units, such as research and selling, but they don't necessarily go away if the company is split in two. A spinoff would add corporate overhead, but Relational believes the value that will be unlocked by spinning off the steel business would greatly outweigh these costs. Because Relational has partnered with CalSTRS, it will have even more credibility than usual. Its shareholder proposal is not binding and can be ignored by management, but ignoring shareholders like CalSTRS and Relational will not be well received by the investor and corporate-governance communities and will likely lead to significant board changes in 2014 if Relational persists with its fight. Relational could launch a proxy fight in 2013 as well to improve the likelihood the proposal gets implemented if approved.

-- Kenneth Squire

The 13D Activist Fund, a mutual fund runby an affiliate of the author and not connected to Barron's, has no position in the securities mentioned here. In addition, the author publishes and sells 13D research reports, whose buyers may include representatives of participants in, and targets of, shareholder activism.